Chinese Influence and Directions of Economic Competition in the ASEAN Region

Abstract

China and the ASEAN member countries have concluded the following cooperation and economic agreements: 1) an agreement on trade in services (2004), 2) an agreement on Investment (2007), and 3) a China-ASEAN FTA (coming into effect on 1 January 2010). As a result of these agreements, most tariffs on trade between China and the original six member countries of ASEAN had been reduced to zero percent by 2009 and by 2011 the value of the total trade between China and ASEAN had amounted to more than US$ 4 billion, while the value of investment between China and ASEAN had risen to more than US $ 5 billion by 2015. With China assuming a dominant role in trade, investment and tourism in Southeast Asia, it has had a great influence in the economy of the region. With its large market and high purchasing power, the ASEAN, on its part, has assumed a growing economic role in the world economy. In other words, with its a large market and high purchasing power, ASEAN has attracted investment and trade from outside the region, and has thereby provided the Chinese with greater interest in expanding its economic presence in the region. This has had the important effect of enhancing the competitiveness and bargaining power of ASEAN on the global arena.

          China has become the largest trading partner of ASEAN, and the 10 ASEAN countries together have become China’s third largest trading partner. In particular, Chinese products have expanded its ASEAN market. This resulted in a rapid increase in imports from China – from 8.5 percent of the total imports of ASEAN in 2003 to 16.9 percent in 2013. The value of trade between China and ASEAN rose to US $443,600 million. China has focused its attention on expanding its role and influence in ASEAN through the use of “soft power”, that is, through economic and cultural tools, whereas its economy has continued to grow and has been projected to be the world's largest economy by 2025. China has set a goal of expanding its economy from the current US$ 1 trillion to US $4 trillion by 2020. China has thus clearly become highly influential in shaping the direction of economic competition in the region.